When it comes to both gasoline and heating oil prices, consumers could be in for some significant price relief. The key word here is supply, or more precisely, oversupply.
The Energy Department reported lower spot prices for gasoline in all major markets for the week ending November 2. Prices for gasoline have been declining for weeks because of reduced demand and a build up of inventories. Lower consumption partially reflects the seasonal shift in driving habits, but a much bigger factor is the weak economy and the high unemployment rate which is keeping a lot of drivers off the road.
The trend in oversupply is even more pronounced in the heating oil market. The Energy Department resumed reporting distillate prices this week and will continue to do so until mid-March. This market has been decimated by the weak economy and the fall in trucking traffic.
US inventories of distillate are almost 50 percent higher now than they were at this time last year. This can only be good news for heating oil buyers. Gasoline stocks are up around 25 percent and crude oil inventories are nearly 34 percent higher than a year ago. Basically, we're awash in refined products!